Electric Cars are Expensive. Here’s How We’re Democratising Electric Vehicle Access At Loveelectric

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If you’re looking to get an electric car, you might head to your local car dealership or search online for second-hand electric cars. And you’ll be hit with reality: electric cars are expensive.

They’re expensive for a few reasons:

Most electric cars are new, so you’ll be paying full price.
There are fewer of them, and supply isn’t catching up with demand.
They use newer, more expensive technology.

Luckily, if you really want access to an electric car, there are alternatives. And there’s one in particular that makes accessing an electric car a lot easier: an electric vehicle salary sacrifice scheme.

A couple of years ago, our CEO, Steve Tigar, wanted a new electric car. After coming to terms with the fact that the price was out of budget, he decided to try getting one through an employer’s salary sacrifice scheme.

However, he came across a few other issues:

It’s very difficult, as a company, to implement a salary sacrifice scheme yourself. You need to be FCA regulated and have all the financial and legal resources in place.
Third-party electric car schemes can work, but they don’t specialise in salary sacrifice and often their policies lack transparency so you don’t always know how much you’re paying and what you’re paying for
Third-party electric leasing companies have a narrow selection of cars, so you can’t always get the car you want.

That’s when the idea for loveelectric was born, and husband and wife Steve and Lyndsey set out to build a company that would fill those gaps.

In this article, we’ll share with you:

‍Note: Are you an employer or employee interested in implementing an electric car scheme for your company? With loveelectric, employers can offer the electric car salary sacrifice scheme as an employee benefit at no extra cost. Get set up now.

Why a salary sacrifice scheme is the best way to access an electric car?

If you’re in the UK, you’re probably already seeing electric cars everywhere you go. They are becoming more and more popular. In fact, by 2030, EV chargers will outnumber fuel pumps in the UK.

But if you look up the price of an electric car, it’s probably outside your budget. Prices for the cars with the longest range often start at £40k, and there are very few second-hand electric cars on the market.

So what’s a better way to use an electric car? Car leasing.

Car leasing is different to car financing or monthly car subscriptions. With a car lease, you’ll sign a contract that will give you access to an electric car for typically 24 to 48 months.

That monthly fee often includes:

Servicing,
Maintenance,
Insurance (sometimes),
Breakdown assistance.

And most importantly: a new car that won’t break down and require constant maintenance.

Car leasing offers a great alternative to using an electric car. But an even better way is to lease a car via a salary sacrifice scheme.

A salary sacrifice scheme means that you sacrifice a portion of your gross salary to pay for a lease. So essentially, you pay for your monthly lease with your pre-tax salary. This means that you don’t pay income tax or national insurance on the salary you have given up, which effectively lowers the cost of the lease. (And if you pay a higher rate of tax, you will save even more).

There are a few other benefits to getting an electric car via a salary sacrifice scheme:

Your employer can pick up the tab for the VAT (they can claim back half of this back from the government).
Lower income tax.
Lower national insurance contribution.
Lower Benefit in Kind tax.
You won’t have to pay a deposit.
You won’t have to undergo a personal credit check.

The UK government permits salary sacrifice schemes to incentivise companies to offer non-cash benefits. You can learn more here: Salary sacrifice for employers

In order to take advantage of this scheme, your employer needs to be eligible for credit via a car leasing company. In order to participate in the scheme, employees have to be permanent, able to afford salary sacrifice and not reach retirement age during the time of the scheme.

As an employee, you would then order a car, and the lease would be automatically paid via your gross salary through your employer’s payroll.

To summarise, using the electric car scheme is a great, cost-effective way to access an electric car.

The issues companies and employees face when implementing an electric car scheme.

However, it’s not always easy to implement an electric car scheme. At loveelectric, we explored the problems companies faced when it comes to implementing the scheme:

Implementing a salary sacrifice scheme internally from start to finish is hard.

There are two ways to implement a salary sacrifice scheme:

As an employer, you set it up yourself.
You work with a third party that specialises in setting up salary sacrifice schemes.

Setting up a salary sacrifice scheme as an employer can come with a few challenges:

You need a lot of legal resources.
You need some insurance knowledge and expertise.
You’ll have to adhere to multiple regulations.
You have to prepare multiple contracts and educate employees.
Most importantly, you may need to gain FCA authorisation.

If you’re a company implementing it yourself, you’ll also be faced with many questions that will require multiple consultations with lawyers and accountants.

Questions like:

What happens if the employee leaves and we are burdened with early termination fees from the leasing companies?
How much will it cost to implement?
Who's going to look after the vehicles?
What happens if our employee gets sick or goes on parental leave?
What's included in the “maintenance” package? What does that mean, and where do our employees go to maintain their car?
What happens if the tyre need to be replaced?

There are so many uncertainties that implementing an electric car scheme on your own might not be worth your efforts.

Third-party electric car schemes can be expensive and might not have the best policies

The alternative is to work with a third-party electric car salary sacrifice scheme, however, this brings its own challenges:

Their pricing is not always transparent, so you often don’t know what your employees will be paying until they are set up on the scheme.
Their monthly lease options might still be quite expensive and include high fees, such as double rent on the first 6 months of the lease.
They might not have great early termination policies which puts more of the risk on the employer.
They will likely lease the cars themselves, which means they might not offer the best value to your employees.

From our experience, most companies want to offer better benefits—including salary sacrifice—to their employees, but at the same time, there is always a big discussion around risk.

Those risks often emerge from unattractive early termination policies from other leasing companies. As an employer, you want to help your employee get the car of their dreams – but you don’t want to be stuck with the liability for an expensive asset if the employee then resigns.

Especially during periods of uncertainty, companies often can’t afford the penalties that come with making an employee redundant.

There might also be other early termination complications, such as:

Some early termination policies—because of the standard six months resignation policy— are too expensive and stringent for most businesses.
Some policies offer no redundancy cover for under 100 employees.
Some might have a limit of 10% termination claims.
Some policies offer no protection against early termination for employees
Some don’t even include parental leave.

Companies are facing a talent shortage and are looking for benefits that help with retention.

Companies are currently facing a talent shortage due to a combination of the current geopolitical situation, increasing inflation and the great resignation.

That means employers are constantly looking for great benefits to help retain and attract talent. However, a lot of the best benefits are out of reach for small companies with under 100 employees. Perkbox and vouchers really only go so far.

As an employer, you want to reward and treat your employees and help their salary go further. It can be hard to find benefits that enable that.

Companies want to begin their journey to net zero and hit their ESG targets.

More employees and employers are becoming aware of current environmental challenges and want to take part in reducing their carbon footprint.

Larger companies are receiving pressure from stakeholders to meet certain ESG targets and reduce their carbon footprint. Smaller companies that are still environment conscious are also looking for ways to make an impact.

But finding ways to reduce your carbon footprint is often easier said than done, and companies often need to commit large budgets in order to implement any serious changes.

At loveelectric, we wanted to build a company that would overcome these challenges.

How does loveelectric addresses these issues?

loveelectric was born from the idea of democratising electric cars via a salary sacrifice scheme. It’s free for employers, easy to set up and we offer some of the most affordable cars for employees.

Here is more detail on how we're democratising EVs:

We are specialists: we do the admin and take care of everything from start to finish.

We’re specialists in the electric car salary sacrifice scheme. At loveelectric, we take care of all the admin work and paperwork so you can offer attractive benefits packages to your employees while retaining top talent.

Setting up an electric car salary sacrifice scheme with loveelectric is easy as an employer: once you reach out to us, we’ll check with our partner leasing companies if you’re eligible. If you are, we set you up with a contract and an employee portal.

The employees that are eligible will have access to this portal and will be able to order their cars, get their questions answered and a lot more. Once employees receive their car, we’ll help you set up payroll so it’s easy to take a portion and salary sacrifice it.

You’ll also have access to a driver handbook, where employees can find all the answers to their questions. When you sign with us, we make sure you get everything you want included in your scheme, minus the hassle that comes with it.

Once the scheme is in place and the employees start paying through payroll, we provide monthly regular payroll reports. Our reports have all the information, which makes reconciliation and accounting really straightforward.

We are a broker, not a leasing company.

Electric cars are expensive because leasing companies behave like landlords. They own the property – in this case, cars – and they rent it out.

At loveelectric, we partner with leasing companies and car dealerships and we act more like a credit or a mortgage broker. We’ve currently partnered with over 300 car dealerships, which means we have access to all the electric cars on the market and employees are therefore able to get the best prices at the best value.

However, we’re also more than a broker because our package offers a lot more than just a lease. We help you set up the scheme at your company, we help educate your employees, and the lease includes important car expenses such as:

Insurance
Maintenance
Servicing
Tyre replacements
Glass replacements

You can learn more about everything we offer here: How loveelectric works

We have the best early termination policy on the market.

One of the first concerns employers have regarding the electric car scheme is: what happens if my employee leaves or is made redundant?

Other electric car schemes might only set up protection after 12 months or will charge high penalties for early termination. We provide a high quality and market-leading early termination protection service.

If an employee leaves after 3 months, they just pay a one-month fee to end their policy. We also cover situations like accidental death, when someone's off work on sick leave for a prolonged period, or situations where the employee loses their driving licence on medical grounds.

We also cover parental leave. For instance, if an employee’s salary drops below national minimum wage whilst on parental leave, they can keep the car rent-free for up to 12 months.

From 15th August 2022, we will also cover redundancy, so if you make an employee redundant after 6 months, the employer only pays a one-month fee to end the policy. Employees can also pass on the lease to a work colleague, or take it with them to their next employer. Read more about our policy here: loveelectric’s early termination policy.

This means:

Your company won’t face penalties if your employees resign, or in the unfortunate event that you need to make redundancies .
You won’t have to pay big sums to your leasing company because something unexpected happened.
Your employees won’t have to break the bank or lose their car because they are on parental leave.

Here is a non-exhaustive list of other benefits our policies cover and that you and your employees can take advantage of:

Your employees can always cancel the delivery of the vehicle up until pretty close to three weeks before.
Instead of cancelling the lease, employees can pass it on to a colleague or take it with them to their new employer provided their new company is eligible.
Our policies cover the cost of early termination fees if you need to end your lease early.
Employees get up to 12 months rent-free and parental leave, which is a good form of lifestyle protection.
There’s no limit on the number of claims you can make.
Regardless of the gap, we will cover it in the event of a car write-off.

We are transparent with our fees and policies.

One of the issues we noticed with other electric car schemes is that it’s difficult to know how much the monthly lease really is, what their early termination policy is and what the penalty fees are.

At loveelectric, we aim to be as transparent as possible about how we work. You can see the lead times for cars at all times. There are no hidden charges, administrative fees and artificially low monthly hidden fees that require a huge deposit.

How do we make money? We simply charge a small commission against the P11D value of the car (you’ll not pay more than 1.5%) which is incorporated into the prices you see on our site. We also charge a small administration fee to the employer for each lease taken out to cover the ongoing costs of managing the lease over the 24-48 month period. This cost is simply deducted from the employer national insurance savings generated by the scheme, so the loveelectric service is cost neutral for your company.

We’re also a B corp (pending), which means our commitment to the planet and our people is enshrined in the company's legal structure and scrutinised by independent auditors every year.

We help companies meet ESG targets.

At loveelectric, one of our goals is to help companies achieve their ESG goals without spending a penny.

By encouraging your employees to go electric, you’re reducing your company’s carbon emissions altogether. You’re also encouraging your employees to decrease their carbon footprint.

Here’s what that means:

Your employees live happier lives because they won’t feel guilty about their car’s emissions.
Your company can get started on its journey to net zero.
Your staff feel good about working for an employer that stands for burning issues like climate change.
Your brand’s reputation becomes even stronger and you become known as a good place to work for.
Most companies and institutions want and feel great about partnering with you.

We help companies offer a great benefit to employees, even small companies.

You usually need to be a big corporate company with a strong balance sheet to be able to offer your employees attractive benefits packages.

The good news is that with an electric car salary sacrifice scheme, you can help your employees take their salary further – even as a small company with 20 employees – for no cost at all.

In a competitive job market and increasing inflation, offering benefits such as a cheaper electric vehicle is simply a good way for you as an employer to attract and retain more talent.

Let’s set you up with access to an electric car.

In a job market as competitive as ever, it is in your company's best interest to offer benefit packages that attract and retain talent.

As an employee, you might be interested in a new car that doesn’t constantly break down, is cheaper in the long run and is good for the environment.

Either way, at loveelectric our purpose is to help democratise electric vehicles and to help employers offer better benefits to employees.

Are you an employer that wants to set up the scheme? Or an employee that wants to encourage their employer to sign up? Reach out and we’ll help guide you on the next steps.